Minister rejects tax relief bid from Standard Life shareholders

Minister for Finance Michael Noonan has said he does not intend to grant relief to Irish shareholders in Standard Life, many of whom are facing substantial tax bills as a result of a postal delay.

He was replying to a parliamentary question from Fine Gael TD Anthony Lawlor on whether he would introduce a special measure to ensure Irish shareholders are not left out of pocket. Mr Noonan included a specific clause in last year's Finance Act to ensure Vodafone shareholders who fell victim to a similar mix-up did not get hit with a tax bill.

Mr Noonan said the measures announced last year for Vodafone shareholders, who inadvertently found themselves with a bill for income tax, universal social charge and PRSI, had been put in place as "the shareholding of very many of those individuals arose originally from their investment in Eircom". He noted that former Eircom shareholders were still at a loss on their original investment. "I considered, given the particular background in this case, that to leave those shareholders with income tax and other liabilities on foot of a decision they inadvertently made or didn't make at all would have been inequitable."

But he said “this particular background is not a feature of the Standard Life return of value case”.

Postal delay

Around 60,000 Irish shareholders in Standard Life were generally customers of the former mutual at the time it became a listed company in . All will have a paper profit on that transaction.

Many are facing significant tax bills after their letters opting to receive a payout from the company as capital rather than as a special dividend failed to reach the company in time.

The Royal Mail has accepted that the failure to deliver the letters was due to a problem either with itself or An Post, though it cannot say for sure which one. Only letters from Irish shareholders appear to have been affected.

Fewer than one in four letters sent to Standard Life’s registrars actually arrived by the deadline though the company accepts most, if not all, were posted well ahead of the date.

“The fact that notifications of the options made by individuals in the Vodafone case last year were delayed in the post . . . or were otherwise not dealt with by the company as shareholders would have wished were not factors in my decision to provide the relief,” Mr Noonan said in the written reply.

He held out some hope that he might revisit the issue.

Revenue

“I will continue to be advised by my officials, in liaison with the Revenue Commissioners, in relation to the issues,” he said.

Although the problem may lie with the State-run An Post, he added: “I am not convinced of the appropriateness of the State, as a matter of practice, addressing by way of legislation the difficulties of shareholders in commercial public companies arising from a failure either to make decisions in relation to their commercial investments, the timely communication of decisions or arising from problems caused by administrative arrangements.”